(1) R(1st Sm.)-Financial Acctg.-I-H/CC-1.

1Ch/CBCS

2020
FINANCIAL ACCOUNTING –I — HONOURS
Paper : CC-1.1 Ch
Full Marks : 80

The figures in the margin indicate full marks.

Candidates are required to give their answers in their own words
as far as practicable.

Group - A
Answer any four questions.

1. Dr. R. K. Das started his profession on 1st January, 2019 as medical practitioner. His incomes and
expenses for the year 2019 relating to his profession were as under :
Amount
(`)
Fees received in cash 24,000
Fees accrued but not received 6,000
Rent paid for the Chamber 6,000
Outstanding Rent 2,000
Salary paid to Staff 6,000
Salary paid in advance to Staff 1,000
(included in the above)
Miscellaneous expenses paid 200

You are required to compute the net income of Dr. R. K. Das from his profession for the year ended
31.12. 2019 under (a) Cash Basis; (b) Accrual Basis. 10

2. ABC Industries depreciates its machines @10% p.a. on straight line basis. On 1st April, 2018 the
balance in Machinery Account was ` 17,00,000 (original cost ` 24,00,000). On 1st July, 2018 a new
machine was purchased for ` 50,000. On 31st December, 2018 an old machine having w.d.v of
` 80,000 on 01.04.2018 (original cost ` 1,20,000) was sold for ` 60,000.
Show the Machinery Account for the year ended 31st March, 2019. 10

3. (a) What is GAAP?

(b) Explain Fair Value Accounting. 5+5

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4. Sri Mehta of Bombay consigns 1,000 cases of goods costing ` 100 each to Sri Sundaram of Madras.
Sri Mehta pays the following expenses in connection with the consignment : carriage ` 1,000; freight
` 3,000 and loading charges ` 1,000. Sri Sundaram sells 700 cases at ` 140 per case and incur the
following expenses : clearing charges ` 850; warehousing and storage ` 1,700; and packing and selling
expenses ` 600. It is found that 50 cases have been lost in transit and 100 cases are still in transit.
Sri Sundaram is entitled to a commission of 10% on gross sales.
Draw up Consignment Account and Sri Sundaram Account in the books of Sri Mehta. 10

5. A trader sends out goods on approval to some customers and includes the same in the sales account.
On 31.12.20, the Sundry Debtors balance (` 2,50,000) includes ` 14,000 regarding goods sent on approval
against which no intimation was received as on 31.12.20. These goods were sent out at 25% above cost
price and were sent to A – ` 8,000 and B – ` 6,000. Stock in trade in godown was valued at ` 50,000
on 31.12.20. A sent intimation of acceptance on 31.01.21 and B returned the goods on 15.01.21.
Pass adjustment entries on 31.12.20. Show also the entries to be made during January, 21. 10

6. From the following information you are required to prepare the Sales Ledger Adjustment Account as
on 31.03.20.

(`)
Debtors as on 01.03.20 55,842
Transaction during the month were as follows :
Sales (including cash sales ` 10,000) 1,08,606
Cash received from Debtors 88,753
Discount allowed to Debtors 480
Acceptances received from Debtors 7,120
Return from Debtors 5,430
Bills receivable from Debtors 1,120
Bad debt written off 3,890
Sundry charges debited to customer 378
Transfer to bought ledger 100
Provision for doubtful debts 2,500
Bill endorsed 100

10
 (3) R(1st Sm.)-Financial Acctg.-I-H/CC-1.1Ch/CBCS

7. From the following particulars, prepare a claim for loss of profit under the consequential loss policy :

Date of fire 30.06.20

Period of indemnity 6 months
Sum insured ` 80,000
Turnover for the year ended June 30, 2020 – ` 4,00,000
Net profit for the accounting year ending March 31, 2020 – ` 25,000
Standing charges for the accounting year ending March 31, 2020 – ` 57,000
Turnover for the year ending March 31, 2020 – ` 4,10,000
Turnover for the period from 01.07.20 to 31.12.20 – ` 1,12,000
Turnover for the period from 01.07.19 to 31.12.19 – ` 2,20,000
Saving in standing charges because of fire – ` 6,000
Increased cost of working during dislocation period – ` 12,000 10

8. Trial Balance as on 31.12.2020 of Mr. R. Sen contains the following items :

(` )
Provision for doubtful debts 15,000
Bad debt 10,000
Sundry Debtors 1,40,000
On enquiry it was ascertained that Debtors include :
(i) ` 20,000 due from S. Roy and Creditors include ` 15,000 due to S. Roy.
(ii) ` 8,000 due on account of sale of furniture.
(iii) Bad debts ` 8,000.
Prepare Provision for doubtful debt Account and Bad debt Account. Provision for doubtful debts is to
be created at 5% on trade debtors. 10

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Group - B
Answer any two questions.

9. Mr. T. S. Gupta kept no books of accounts for his business. An analysis of his rough Cash Book for the
calender year 2020 shows the following particulars :

Receipts Amount Payments Amount

` ` `
Received from Debtors 80,000 Overdraft (on. 01.01.2020) 5,000
Further Capital introduced 10,000 Paid to Creditors 42,000
Business expenses 12,000
wages paid 17,500
Proprietor’s drawings 5,000
Balance at bank (31.12.2020) 6,500
Cash in hand (31.12.2020) 2,000
90,000 90,000

The following particulars are also available :

31.12.19 31.12.20
` `
Debtors 60,000 90,000
Creditors 20,000 22,500
Stock in trade 16,000 18,000
Plant and Machinery 30,000 30,000
Furniture 2,000 2,000
All his sales and purchase were on credit.
From the above particulars, prepare Trading and Profit & Loss Account for the year ended 31st
December, 2020 and a Balance Sheet as on that date. Provide depreciation on plant and machinery
@10% p.a. and on furniture @5% p.a. 20
 (5) R(1st Sm.)-Financial Acctg.-I-H/CC-1.1Ch/CBCS

10. A summary of receipts and payments of Medical Aid Society for the year ended 31.12.2019 is given
below :

Receipts ` Payments `

To, Balance (01.01.2019) 7,000 By, Payment for medicines 30,000

To, Subscription 50,000 By, Honorarium to doctor 10,000
To, Donations 14,500 By, Salaries 27,500
To, Interest on Investments 7,000 By, Sundry expenses 500
@7% p.a.
To, Charity show proceeds 10,000 By, Equipment purchased 15,000
By, Charity show expenses 1,000
By, Balance (31.12.2019) 4,500
88,500 88,500
Additional information (in `) :

01.01.2019 31.12.2019
Subscriptions due 500 1,000
Subscriptions received in advance 1,000 500
Stock of medicines 10,000 15,000
Amount due to medicine suppliers 8,000 12,000
Value of equipments 21,000 30,000
Value of Buildings 40,000 38,000

You are required to prepare Income and Expenditure Account for the year ended on 31st December,
2019 and the Balance Sheet as on that date. 20

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11. The following is the Trial Balance of Mr. Roy as on 31st March, 2019 :

Debit Balance ` Credit Balance `

Plant & Machinery 3,10,000 Capital 4,20,000

Opening Stock 30,000 Sundry Creditors 20,000
Sundry Debtors 40,000 Sales 2,10,000
Wages 10,000 Return Outward 20,000
Salaries 15,000 Provision for Doubtful debt 1,000
Rent (April 2018 to June 2019) 18,000 Interest 4,000
Purchases 1,50,000
Return Inward 10,000
Bad debt 9,000
Insurance 3,000
Office Expenses 5,000
Cash in hand 30,000
Cash at Bank 45,000
6,75,000 6,75,000
Additional information :
(i) Stock on 31st March, 2019 was valued at ` 35,000.
(ii) Further bad-debt of ` 1,000 is to be written off and a provision for doubtful debts @5% on
Sundry Debtors is to be maintained.
(iii) Goods costing ` 5,000 have been distributed as free sample.
(iv) Purchase of machinery worth ` 20,000 on 01.10.2018 has been wrongly included in Purchases
Account. Depreciation @10% p.a. is to be charged on machinery.
(v) Office expenses outstanding ` 500.
Prepare Trading Account, Profit & Loss Account for the year ended on 31.03.2019 and Balance Sheet
of Mr. Roy as on that date. 20

12. (a) What are the qualitative characteristics of accounting information?

(b) What are the limitations of Historical Cost Accounting?
(c) What is the procedure for issuing accounting standards in India? 6+7+7